Britain is considering recalling its ambassador to Israel to protest at Prime Minister Binyamin Netanyahu's decision to expand settlement building, a diplomatic source said on Monday.
The embassy declined to comment on the report, but the British issued a statement saying they had made clear they would not support strong Israeli retaliation to a UN vote last week that gave the Palestinians de facto recognition of statehood.
"The recent Israeli government decision to build 3,000 new housing units threatens the two-state solution and makes progress through negotiations harder to achieve," the British embassy in Tel Aviv said.
"We have called on the Israeli government to reconsider."
A diplomatic source, who declined to be named, said London would decide later in the day whether to recall its ambassador.
Such a move would represent a severe diplomatic reproach to Netanyahu. Israel's Vice Prime Minister Moshe Yaalon told Israeli Army Radio he was not aware of any recall.
"I did not hear of this, either via the foreign ministry or the prime minister's office. Therefore I have a hard time believing it is true," he said.